Examiners’ reports 2015

Examiners’ reports 2015

LA3017 Commercial law – Zone A

Introduction
Three common difficulties were exhibited in this year’s answers. One was
fundamental: an inability to recognise that certain areas of law were involved in
resolving the hypothetical problem. Candidates might, for example, fail to notice that
when asked to advise (in Question 6) ‘Properties Ltd’, the facts given raised issues
pertaining to agency and not to the sale of goods. A second difficulty was presented
by those candidates who did not carefully consider the facts given in a problem
question. The resulting legal reasoning was often not directed at the given issues.
In some instances, a general discussion of a particular area of law was set out, in
absence of any attempt to apply this law towards the resolution of the problem
given. A third, somewhat less fundamental difficulty, was an inability to identify the
particular and specific issues involved within a broad area of law which the
candidate had recognised as relevant. At times, this problem seemed to arise
because candidates appeared to be covering legal issues which had formed
examination questions set in previous years.
Some candidates, in other words, appeared to be reproducing answers to past
examination questions. The purpose of Examiners’ reports is to give an indication of
a method by which particular questions can be answered and some indication of the
law necessary to answer these questions, not to form a base of specific knowledge
which is to be recited as the answers to future examination questions.
It is extremely important that you apply the law to the issues presented in a
problem. You should consider the principles developed within the relevant cases
and the reasons behind these particular principles. These must then be applied to
the problem to resolve it. For many candidates, however, their answer to a problem
question resembles a ‘shopping list’ of cases dutifully recorded in the examination
booklet. Although can be hard to discern the relevant from the irrelevant and
caution encourages a complete list of cases to ensure that none are omitted; and it
is tempting to produce a lengthy answer in the hope that the examiner will be
impressed by your breadth of knowledge, a successful answer identifies the issues
and applies the relevant law to them. Such an answer displays not only knowledge,
but also understanding of the subject being examined. The recitation and
discussion of cases which are irrelevant to the question merely highlight a
candidate’s uncertainty as to which issues are involved in the question. Avoid
hurrying into an issue without full consideration of the question as a whole. If you
prepare a careful plan of your answer before writing it in full, you will find that the
time spent in making such a plan is repaid by the clarity of the final answer. Among
other things, it allows you to see the interaction of issues before you commit to one
course or another. It should also prevent you from omitting points you had intended
to discuss.

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Many candidates struggled to answer essay questions thoroughly. Their attempts

were often, and unfortunately, confined to the recitation of everything they knew
about a particular subject. Such candidates often presented a great deal of material
but an apparent inability to discern the relevant from the irrelevant and a lack of
analysis as to the underlying nature of the question. In attempting to answer essay
questions, you need to consider the exact nature of the question asked. At times,
this can be very broad, allowing you to draw upon particular areas covered in this
course. The information drawn upon needs to be employed as support for the
arguments made in your answer. Resist the temptation to write everything you know
about a particular area of law and focus on that which is relevant to answering the
question. Consider whether or not you are addressing your answer to the question
asked. A part of this answer will, necessarily, involve legal analysis.
In other instances, candidates were unable to answer the question asked in an
essay question and chose, instead, to adapt the question to a topic that they did
know something about. Such an attempt is not, however, an answer to the question
asked. It also leaves the examiners with the impression that the candidate is unable
to answer four questions from the examination paper.
Finally, many candidates suffered from an inability to budget their time. In these
instances two or three good answers would be followed by a weak (and in some
cases non-existent) effort to answer the balance of the paper. It goes without saying
that it is difficult to succeed where all of your efforts are concentrated on two or three
answers when the examination paper requires four questions to be answered. A
number of candidates did not appear to have sufficient knowledge of commercial law
to attempt four questions. Lastly, remember the importance of writing the answers
clearly. It is difficult, and sometimes impossible, for examiners to assess the illegible.

Comments on specific questions

Question 1
‘For a long time, commercial transactions were shielded from the statutory
intervention that was a growing trend in relation to other fields of human
activity…All this has now changed.’ (Goode on Commercial Law)
Discuss.
General remarks
This essay question invites you to draw upon knowledge acquired across the
syllabus in order to analyse the quotation provided. The question asks you to
consider the changing nature of commercial law – from the customs of the law
merchant to the increasing numbers of various forms of European Union legislation.
There is no ‘right’ approach to answering this question and answers are assessed
according to the knowledge displayed and the understanding of the development of
commercial law.
Law cases, reports and other references the examiners would expect you to
use
Many different materials could be drawn upon to answer this question – to list any
specifically is to deny the potential relevance of those not listed. As stated above, the
essay asks you to draw upon the breadth of the knowledge you have acquired in the
course of your commercial law studies to provide an insightful answer to the question.

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Common errors
Attempting to write everything the candidate knew about commercial law, with no
particular order to the way in which the answer is structured. Not applying the material
presented to the question. Writing an essay on a particular aspect of commercial law
with no attempt to utilise this information to answer the question. While the question
is, deliberately, of a very general nature it does require some consideration of what
‘statutory intervention’ might mean. In the worst answers, candidates did not consider
(or even mention) statutes.
A good answer to this question would…
develop a reasoned argument around the sources of law drawn upon. Creativity,
flair and good grammar would contribute to a strong answer.
Poor answers to this question…
recited various materials and sources without attempting to develop a coherent and
relevant argument. Very poor answers used prepared answers to another question
– such as, for example, on the nature of commercial law.
Question 2
‘Although nemo dat quod non habet remains an important rule in English law,
the exceptions to it have become so numerous as to remove the strictness of
the rule.’
Discuss.
General remarks
This essay question invites you to consider the nature of the nemo dat rule in
English commercial law and its exceptions. You are asked to assess the extent to
which the rule remains a binding force in English commercial law, with reference to
the decided cases and legislation.
Law cases, reports and other references the examiners would expect you to
use
The cases and statutory provisions necessary to answer this question well can be
found in Chapter 4, particularly Section 4.8, of the subject guide and Chapter 9 of
Sealy and Hooley.
Common errors
Failing to raise a sustainable or coherent argument and, instead, producing a highly
descriptive account of a narrow range of material (e.g. the decision in Cundy v
Lindsay).
A good answer to this question would…
consider not only when exceptions are made to the rule but also why they are made
in English law. Good answers would advance a thesis directed at answering the
question (e.g. that the nemo dat rule was/was not an important rule in English law
or that the exceptions were/were not so numerous as to obviate the basic rule).
Poor answers to this question…
set out a mass of information – largely in the form of cases and statutory sections –
without attempting to develop an argument which addressed the question set. A
good answer contains the necessary cases and statutes that indicate a good
knowledge of the relevant law, they use this information to support arguments
addressed to answering the question. Or, in other words, the knowledge is used to
indicate an understanding of the law and the ability to develop a cogent argument.
Student extract
Nemo dat quod non habet is defined as not being able to give what one does
not own. A person or seller is not able to give good title to a buyer of a good

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of which he has no ownership. This general rule is confirmed by statute, in

the Sale of Goods Act 1979 s. 21(1) which demonstrates that ‘where goods
are sold by a person who is not their owner, and who does not sell them . . .
with the consent of the owner, the buyer acquires no better title to the goods
than the seller had’. Good title refers to legal ownership of the good, not
subjected to any disturbances. Goods, according to s. 61(1) of the SGA,
includes ‘all personal chattels, other than things in action and money’. The
nemo dat rule therefore allows for only owners to be able to sell goods
allowing for a buyer to receive ‘good title’. Though this is the general rule
however, there are exceptions, so much so that it would seem that the
strictness of this rule has been removed.
The exceptions to the nemo dat rule include: estoppel; possession by [the]
buyer; possession by [the] seller; voidable title; the Factors Act; hire purchase
agreements (only in regard to motor vehicles); agency; and court orders. These
exceptions allow for more lenient ways for a non-owner to give good title.
Comment on extract
The above extract is a very good beginning to this answer for a number of reasons.
First, it begins by defining the rule raised in the essay title, the nemo dat rule. The
candidate does this with a clear reference to the basis of the rule in the legislation,
s.21 of the Sale of Goods Act; then goes further and sets out what is a ‘good’ within
this legislation. Note that the candidate has gone beyond simply reciting the
relevant legislation but has summarised and described this rule in their own words.
Second, having set out the nature of the rule, the candidate then continues to
indicate, at the outset, the exceptions to the rule. Third, the candidate makes some
attempt in the introductory paragraph to indicate the nature of the argument they will
raise in their answer, namely that the extent of the exceptions have removed the
strictness of the rule. These are all strong elements in this introduction but it would
have been even stronger if the candidate had set out with greater clarity the nature
of the argument that they were about to make, rather than simply set it out in one
sentence, partly repeating the phrasing given within the title. Another weakness
from the outset is that certain grammatical errors are presented.
Having so introduced their essay, this candidate then went on to consider each of
the exceptions to the nemo dat rule in turn. This was done by setting out the
exception and its legal basis, with good use made of the relevant cases and
legislation in each instance. In each instance, the candidate explained, in their own
words, what the constituted the exception and how this arose from either the case
law or the legislation. In the latter instances, the candidate was careful to set out the
cases which interpreted the relevant piece of legislation. With regard to each of
these exceptions the candidate displayed a strong knowledge of the law and an
understanding of its application. A coherent and logical structure to the answer was
presented throughout, written in a steady and legible hand. The candidate then
concluded their answer with the argument that the exceptions to the rule did not
remove the strictness of the rule but raised a form of leniency in the application of
the rule and that this was necessary for the operation of the rule itself. The
candidate received a good upper second class mark for this attempt. The principal
weakness exhibited in the answer, and which prevented the candidate from
receiving a higher mark, was that greater analysis of the law could have been
undertaken. In other words, while the candidate demonstrated knowledge and
understanding of the law in a clear and coherent manner, they needed to develop
their argument(s) in relation to the essay title to a much greater extent than was
attempted in this answer.
A question often raised by candidates preparing for their examinations is as to the
length of their attempt to answer a particular question. While there is no set length

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expected by examiners, you may be interested to know that the answer considered
in this extract amounted to six sides of A4 paper, written in a medium size of
handwriting.
Question 3
‘[I]n English law agency is a legal relationship that involves three parties: a
‘principal’, on whose behalf the agent acts; an ‘agent’, who acts on behalf of the
principal; and ‘third parties’ whom the agent brings into legal relations with the
principal. That said, the question is frequently posed, what distinctive element
or elements lie at the heart of agency?’ (Munday, Agency Law and Principles)
Discuss.
General remarks
This essay question asks you to consider the nature of the agency relationship. This
is a wide ranging question which allows you plenty of opportunity to display your
knowledge and understanding of agency law. You are able to make your own
arguments as to the nature of agency.
Law cases, reports and other references the examiners would expect you to
use
The wide ranging nature of this question allows you to select from a variety of
cases, and to a lesser extent legislative enactments, to answer the questions. The
materials necessary to answer this question can be found in Chapters 2 and 3 of
the subject guide and Chapters 3–6 of Sealy and Hooley.
Common errors
Focusing entirely on the decision in Watteau v Fenwick. While this case could be
employed as a part of larger answer to the question, a simple description of the
case does not answer the question.
A good answer to this question would…
display a sound knowledge and understanding of the principal cases concerned
with agency. This knowledge and understanding should be presented in a coherent
and analytical account of the relevant law.
Poor answers to this question…
set out varying amounts of information regarding agency without any attempt to
analyse the nature of the question or address the question with a thesis.
Question 4
Explain how the law seeks to strike a satisfactory balance between (a) the
principle of autonomy and (b) the doctrine of strict compliance in
documentary credit law.
General remarks
This essay title poses a simple question – the necessity of balancing autonomy and
strict compliance in documentary credit law. In attempting to answer the question,
you need to display a knowledge of the relevant principles.
Law cases, reports and other references the examiners would expect you to
use
The cases and other materials necessary to answer this question can be found in
Chapter 8 of the subject guide and Chapter 21 of Sealy and Hooley.
Common errors
Describing the process by which credit could be obtained rather than considering the
matter in relation to the question. Describing in some detail the Uniform Customs and
Practice for Documentary Credits with little attempt to deal with the question itself.

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A good answer to this question would…

engage with the analysis necessary to resolve the central problem of whether or not
these two principles – the principle of autonomy and the doctrine of strict
compliance – are appropriately balanced in documentary credit law.
Poor answers to this question…
focused either on the principle of autonomy or the doctrine of strict compliance with
little attempt to analyse either matter in relation to the other. Very weak answers
simply discussed the concept of credit.
Question 5
‘A cif contract is nothing more than a sale of goods by means of documents.’
Discuss.
General remarks
This essay question requires you to consider the essential nature of a cif contract.
In order to properly answer this question, you need to consider the nature of a cif
contract and also the nature of the contract for the sale of goods in relation to the
decided cases (such as Johnson v Taylor Bros (1920), Smyth & Co v Bailey & Son
(1940) and the Court of Appeal’s consideration in Scottish & Newcastle
International Ltd v Othon Ghalanos Ltd (2006)).
Law cases, reports and other references the examiners would expect you to
use
Cases and other materials necessary to answer this question can be found in
Chapter 7 of the subject guide and Chapter 14 of Sealy and Hooley.
Common errors
Comparing a cif contract to a fob contract. This is not what the question asks you to
consider.
A good answer to this question would…
relate the answer to the decided cases. In addition to the decision of Lord Mance in
Scottish & Newcastle International Ltd v Othon Ghalanos Ltd (2008) there are
enormous variations in the types of terms which can be introduced into a cif
contract. A good answer to this question would consider the types of terms
presented by the decided cases and the extent to which it could be said that a cif
contract was nothing more than a sale of goods by documents. A very good answer
would incorporate and consider the article by Dr Ademuni-Odeke in the study pack.
Poor answers to this question…
described, in general terms, the nature of a contract for the sale of goods in relation
to the Sale of Goods Act 1979 without any attempt to consider this sale in relation to
a cif contract.
Question 6
Properties Ltd, a property development company, enters into a general
agreement with Allbright, an estate agent, whereby Allbright acts as
Properties’ general manager for the purchase of land in Cornwall. Properties
is in receipt of a number of environmental grants from the government which
are conditional upon Properties developing ‘brown-field sites’ rather than
‘green-field sites’. Allbright is under firm instructions to comply with this
condition in order not to jeopardise Properties’ government grants. Trueheart
offers Allbright a particularly attractive green-field site; Allbright tells
Trueheart he needs to refer back to the main office before he can agree to
purchase the site. Allbright pretends to telephone London and then tells
Trueheart that everything is alright and that he can proceed with the sale.

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Contracts are exchanged between Trueheart and Allbright the following

month. Properties’ managing director now refuses to be bound by the
contract as he is afraid that he will lose his government grants. He dismisses
Allbright without notice.
Advise Properties.
General remarks
This problem question is concerned with aspects of agency law. You need to
contrast Allbright’s actual authority with his apparent authority. The central question
posed by these facts is whether or not Properties was entitled to dismiss Allbright,
and the nature of this action in light of the Commercial Agents Regulations.
Law cases, reports and other references the examiners would expect you to
use
Cases and legislative provisions necessary to answer this question can be found in
Chapters 2 and 3 of the subject guide and Chapters 4 to 6 of Sealy and Hooley.
Common errors
Not considering or applying the Commercial Agents Regulations.
A good answer to this question would…
display a detailed knowledge of the case law, notably those cases concerned with
apparent authority and actual authority. In particular, you should consider the
decision in First Energy v Hungarian Intl Bank (1993) in contrast with that of British
Bank of the Middle East v Sun Life Assurance Co of Canada (UK) Ltd (1983). Very
good answers might note the characterisation of First Energy as ‘exceptional’ in
Habton Farms v Nimmo (2002). It is also necessary to apply the provisions of the
Commercial Agents (Council Directive) Regulations 1993, and those cases
interpreting the Regulations, to Properties’ dismissal of Allbright to assess the rights
of Allbright.
Poor answers to this question…
described in some detail the decision in Watteau v Fenwick without answering the
problems posed by the facts provided in this question. Some poor answers
considered whether or not there had been terms implied into the contract by the
Sale of Goods Act 1979 and the consequences of a breach of contract under that
Act. This was bizarre given that there was no sale of goods presented by the facts
in this problem.
Question 7
Spices plc is a national retailer of electrical appliances and goods. Its
standard terms of business require that all buyers pay the agreed price in full
before delivery. The following sales contracts are made at Spices’ Bromley
shop. All the buyers have paid in full for their goods but the particular goods
are still on Spices’ Bromley premises awaiting delivery.
(a) Annabel had contracted to buy a particular Samsung tablet which had
been demonstrated to her.
(b) Bertram had contracted to buy an LG television “just like the one in
the shop, the quality of whose picture I particularly admired”.
(c) Cassandra and Delbert had contracted to buy jointly at a specially
low price Spices’ ex-demonstration bread kneading and baking
machine.
(d) Ed had contracted to buy one of the Miele washing machines
remaining in the shop. At that time there were four left. One of these

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machines was subsequently sold and delivered to another purchaser.

There have been no other transactions in relation to the washing
machines.
Spices has now gone into liquidation. Advise Spices’ liquidator whether or
not he can claim the above goods.
To what extent, if any, would it make a difference in (d) if one of the three
washing machines had been stolen from Spices’ premises?
General remarks
This problem deals with various aspects of when property in goods passes under
the Sale of Goods Act 1979, as interpreted in the case law. In sale (a) it is unclear if
this has been the sale of a generic model or the sale of a specific Samsung tablet. If
the sale has been for a type of tablet, then there is a contract for the sale of an
unascertained good (s.16 SGA) and property cannot be transferred until the
property has been ascertained and it is intended that property passes (s.17). No
mention of an unconditional appropriation is made within the meaning of s.18, Rule
5. If, though, the contract is for the sale of a specific model, property passes when it
is intended to pass (s.18, Rule 1). Sale (b) appears to be of an unascertained
generic television. Is B’s qualification sufficient to identify a particular television?
Property cannot pass to the buyer until the specific television has been ascertained.
Sale (c) is of a specific machine as demonstrated and the intention presumed is that
property will pass when the contract is made (s.18, Rule 1). Has a contrary intention
appeared within s.18? Sale (d) is concerned with the operation and application of
ss.20A and 20B and the co-ownership of goods forming part of an identified bulk. E
is a co-owner with Spices’ liquidator of the machines – if the liquidator sells two of
the machines, then E becomes the sole owner of the remaining (and now
ascertained) machine – s.18, Rule 5(3). If one of the three machines is stolen, then
E becomes the owner of one-half of the two remaining machines (s.20A(4)).
Law cases, reports and other references the examiners would expect you to
use
In addition to the statutory provisions mentioned above, the materials, including
legal cases, necessary to answer this question can be found in Chapter 4 of the
subject guide, especially Section 4.5. Further materials can be found in Chapter 8 of
Sealy and Hooley.
Common errors
Considering that the question raised issues concerned with those terms implied by
operation of the Sale of Goods Act 1979. Omitting to consider ss.20A and 20B of
the Sale of Goods Act 1979.
A good answer to this question would…
break the problem down into its constituent components and address in turn the
different issues posed by sales (a) to (d). A good answer would consider and apply
the criteria established by the cases interpreting the relevant sections of the Sale of
Goods Act 1979.
Poor answers to this question…
identified the wrong issues posed on the facts. This error led to consideration of
areas of commercial law which were not applicable to this problem. Very little credit
can be given for such misplaced attempts.
Question 8
In January 2013 Supermakers Ltd, a manufacturer of machinery, entered two
contracts with Beaubois Ltd, a furniture manufacturer. Each contract was for
the sale of an identical wood planing machine, warranted to produce 500 feet

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of planed wood per hour. One machine was to be delivered on 2 January 2014
and the other on 2 August 2014. The machines were priced at £50,000 each;
and each contract provided that the price was payable by 12 monthly
instalments commencing on delivery, and that property in the goods was to
pass on completion of the payments. The first machine was delivered and
installed, but after it had been working for a fortnight, it was clear that by
reason of its design the machine could only produce 250 feet of planed wood
per hour. Beaubois therefore rejected the second machine on 1 August 2014.
By August 2014 the market price of comparable wood planing machines
warranted to produce 500 feet of planed wood per hour had fallen to £40,000
and a machine warranted to produce 250 feet of planed wood per hour would
likely receive only £25,000. The delay in Beaubois’s production of planed
wood caused it to lose a valued customer. It also deprived Beaubois of an
estimated profit of £10,000 during the month of February 2014.
Advise Beaubois Ltd.
General remarks
This problem question deals with the express terms of the contract between
Supermakers Ltd (S) and Beaubois Ltd (B) and those terms as to the quality of the
goods and their fitness for purpose implied by s.14 of the Sale of Goods Act 1979.
The terms implied by the Sale of Goods Act are conditions, breach of which allows
the buyer to repudiate the contract and sue for damages. The term as to the planing
capability of the machines is expressed as a warranty but the importance of the
term to B indicates that it may have been intended as a condition (s.11(3)). Good
answers should also consider the possible effect of s.15A of the Act. B has
continued to use the first machine with the result that they have likely lost their right
to reject the machine, leaving them with a remedy of damages (s.11). The rejection
of the second machine before delivery raises a number of potential issues. Is the
contract severable under s.11(4) (assuming that the planing capabilities of the
machine are a condition)? Is the situation within s.35A? Is this an anticipatory
breach by B? Is B able to sue for damages?
B’s damages are calculated on the basis of the Sale of Goods Act. You should
consider how the provisions of the Act would apply in this instance. With regard to
the first machine, difficulties attend the loss of the valued customer in relation to
s.53. Is this within the type of loss foreseeable (Hadley v Baxendale) or for which S
must have accepted responsibility (The Achilleas)? If it is not, you will need to
consider the application of s.54. In contrast, the likely profit in February 2014 is
probably within s.53. Damages for the second machine will be awarded under s.53.
A difficulty here is that the calculation is made with reference to market price –
leaving a claim for nominal damages only given the drop in value.
Law cases, reports and other references the examiners would expect you to
use
In addition to the statutory provisions mentioned above, the materials, including
cases, necessary to answer this question can be found in Chapters 5 and 6
(especially Section 6.2) of the subject guide, and in Chapters 10 and 13 of Sealy
and Hooley.
Common errors
Focusing on s.13 of the Sale of Goods Act 1979.
A good answer to this question would…
approach the problem by dividing it into its constituent parts. The first part is
concerned with the nature of the terms (express and implied). The second part is
concerned with the consequences of breach. In resolving these issues, a good

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answer would consider and apply not only the relevant provisions of the Sale of
Goods Act 1979 but also the principles established in the decided cases.
Poor answers to this question…
discussed many aspects of the Sale of Goods Act 1979 without any real attempt to
determine which portions of the Act were relevant.
Student extract
It can be said that the contracts between Beaubois Ltd and Supermakers Ltd
had expressed conditions and warranties as to the make and production
power of the machines.
As the contracts for the machines clearly stated that the machines must be
identical and must have a production capacity of 500 feet of planed wood per
hour, it can be assessed that the production capacity is a condition of the
contracts, as set out in the Sale of Goods Act 1979 section 11 subsection 3.
Hence, with the production capacity being a condition of the contract, a
breach of that condition would entitle Beaubois to treat the contract as being
terminated.
Therefore, Beaubois was entitled to reject the second machine, as
Supermakers had breach (sic) a condition of the contract.
Comment on extract
This extract is taken from a failed attempt to answer this question. Although the
candidate did not fail badly they have not demonstrated sufficient knowledge and
understanding to pass. As can be seen in the extract above, the knowledge
provided is superficial and somewhat irrelevant. Section 11(3) of the Sale of Goods
Act 1979 is relevant to addressing some of the issues presented on these facts but
not in the way the candidate has employed the subsection. An uncertain grasp of
the distinction between conditions and warranties, and, indeed, express terms and
implied terms, is also presented. No interpretive cases were provided. The
candidate struggled to identify how or on what basis damages would be assessed.
The candidate’s answer was brief (about two pages of A4).

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